Kenneth R. Feinberg, a compensation expert, announced G.M.’s plan to pay families of those who died in accidents caused by a defective ignition switch.Published OnJune 30, 2014CreditCreditGabriella Demczuk/The New York Times

By Hilary Stout

June 30, 2014

WASHINGTON — General Motors on Monday became consumed once again by the safety crisis it cannot seem to shake, announcing the recall of 8.4 million more vehicles worldwide — most of them for an ignition defect similar to the flaw that the company failed to disclose in other models for more than a decade.

The announcement came just hours after Kenneth R. Feinberg, a compensation expert hired by G.M., unveiled a plan to pay victims of accidents involving some of the 2.6 million G.M. vehicles already recalled for the earlier ignition flaw, promising swift payments for people who were critically injured and more than $1 million for families of those who died.

The latest recall announcement seemed to deflate whatever good will G.M. had generated with the news of Mr. Feinberg’s plan. Trading in G.M. stock, which had risen slightly on Mr. Feinberg’s news, was suspended temporarily on the New York Stock Exchange while the announcement about the recalls was made. (The stock closed down about 1 percent.)

“It’s kind of like a festering wound,” said Lance Cooper, a Georgia lawyer who represents numerous clients with ignition switch claims. “The more you cut, the more you find.”

The details of the new recall sounded familiar. Keys could inadvertently shift while the cars were running, shutting off the engine and disabling air bags and other important power safety features. The vehicles were older, this time dating as far back as the 1997 model year. There was a toll linked to the recall — seven crashes, eight injuries and three fatalities.

And the National Highway Traffic Safety Administration had been receiving dozens of complaints about the ignition issues in the cars for years. In 1997, some customers alerted the agency that they could not turn the keys in their Chevrolet Malibu. By 1998, some drivers were complaining that their ignitions did not work, according to its database.

G.M. said it would take an additional $500 million charge against earnings to pay for the new recalls. Through Monday — the last day of the second quarter — G.M. has said it will spend $2.5 billion this year to fix safety problems, before Mr. Feinberg makes the first payouts to victims.

Even by G.M.’s recent standards, the announcement of the latest recall was stunning, bringing the automaker’s total through the first six months of the year to more than 29 million vehicles. Last year, all automakers combined recalled about 22 million. In all, there are 64.6 million G.M. vehicles registered in the United States, according to Experian Automotive, an information services company.

Even with the new round of recalls, the plan by Mr. Feinberg is seen as critical to the company’s ability to move beyond a crisis that has prompted criminal investigations, congressional hearings and scores of lawsuits.

The plan he outlined Monday, which provides for payouts even for accidents that have not yet happened (crashes through Dec. 31, 2014, are eligible) could cost G.M. dearly — perhaps in the billions — but it is seen as an important step toward restoring public trust, as well as keeping the company out of long and potentially more costly court battles.

Mr. Feinberg refused to speculate on the overall numbers until the claims have been filed. The window for filing is narrow — Aug. 1 through Dec. 31. The first checks are likely to go out in the fall, and Mr. Feinberg and his associates said they hoped to issue the final payments by the middle of next year.

The plan is at least as generous as past victims’ funds that Mr. Feinberg has presided over, and more than some, including payouts to victims of the Boston Marathon bombings last year. It starts with $1 million for each death. Added to that will be a calculation of lifetime earnings lost as well as $300,000 for a spouse and for each dependent.

Before a room crowded with reporters and a few victims’ relatives, Mr. Feinberg outlined carrot after carrot to entice those who suffered to take the money, instead of taking G.M. to court. The company would not hold driver negligence like intoxication, texting, speeding or drug use against anyone who files a claim, he said. It would not invoke its legal protection from liabilities involving accidents before its July 10, 2009 bankruptcy restructuring agreement. It would make the payments fast — within 90 days for many — and would accept circumstantial evidence unlikely to carry weight in court.

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Kenneth R. Feinberg talking Monday to three relatives of victims: from left, Monica Coronado, Rosie Cortinas and Laura Christian.CreditGabriella Demczuk/The New York Times

And there would be no cap on the overall amount of money G.M. has agreed to spend on victims’ payments.

“General Motors basically has said whatever it costs to pay all eligible claims, they will pay it,” Mr. Feinberg said.

Even those families who have already settled lawsuits with G.M. related to the ignition switch would be eligible for payouts, he said, though they would have to deduct the amount already received from the total. In a nod to the many plaintiffs’ lawyers he consulted in developing the plan, Mr. Feinberg said victims did not have to forgo their right to sue to file a claim. It is only if they agree to accept the money from G.M. that they waive that right. In the end, G.M. is counting on the certainty of a quick payment to prevail.

All those features were enough for one previously skeptical lawyer to say he was going to advise clients to at least file claims.

“I am going to recommend to every one of my clients that they go through the program so they can at least see what the award would be,” said Robert H. Hilliard, a Texas lawyer who represents scores of families with death and injury claims. Then he will analyze the right course to take.

The fact that Mr. Feinberg would not consider dangerous driver behavior, like drinking, was particularly attractive, Mr. Hilliard said, explaining that past courtroom experience suggests that “once a jury hears alcohol, they don’t care if G.M. put a bomb under the hood.”

Other lawyers were more dubious. “Here you have one person who is working for General Motors calling all the shots about causation, eligibility, amount without any court supervision,” said Jere Beasley, an Alabama lawyer who said his firm had reviewed more than 250 potential cases over the defective switch.

In a hypothetical example, Mr. Feinberg said the family of a 25-year-old married woman with two children who was earning $46,400 a year at the time of her accident would receive $4 million.

People with life-altering catastrophic injuries could receive more. In another hypothetical example, a child who became a paraplegic as a result of an accident could potentially receive a payout in the double-digit millions, based on a lifetime medical care plan, lost earning power and other exceptional factors. Families may ask for a different review if they feel they have exceptional circumstances that deserve a higher payment, he said.

The plan seems certain to account for deaths beyond the 13 that G.M. has publicly linked to the defect, as Mr. Feinberg’s criteria are more flexible than the standards the company had been using to determine victims. For example, victims of rear- and side-impact crashes are potentially eligible, he said, as are any passengers, pedestrians or occupants of other cars injured in accidents that can be tied to the defective switch.

Mary T. Barra, G.M.’s chief executive, who has said it is the company’s “civic duty” to compensate victims, released a statement expressing sympathy for the victims without discussing the numbers. “We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”

Victims of any accident where air bags deployed will be ineligible. But Mr. Feinberg said he would accept evidence other than definitive black-box proof that air bags had failed and would work with claimants to help find it. Among the possibilities, he said, were police reports, witness statements, photographs, hospital reports, insurance claims and even warranty and maintenance records that showed the vehicle had a history of unexpected stalls. Still, finding proof will be difficult for accidents that are years old.

The compensation plan also sets payments to those who were treated for less severe injuries, including people who have fully recovered. Anyone treated either at a hospital or an outpatient medical facility within 48 hours of the accident is eligible to file a claim. For those accepted, the formula is $20,000 for one night in the hospital up to a maximum of $500,000 for 32 or more overnights.

As Mr. Feinberg began listing various compensation scenarios, three women seated together at the event began to softly cry.

They were Laura Christian, the birth mother of Amber Rose, whose death G.M. includes in its 13 fatalities, along with Rosie Cortinas and Monica Coronado, the mother and sister of 23-year-old Amador Cortinas, killed this past fall when the Cobalt he was driving crashed.